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I would like to pose some questions that we have encountered on FAS 141R.
1. FAS 141R is effective for acquisitions made after December 31, 2008. However, if we make an acquisition in fiscal-year 2008 that contains a contingent consideration or a contractual contingency that goes beyond fiscal-year 2008, would they be subject to FAS 141R in subsequent accounting periods?
2. If a contingency exists in the acquisition (i.e., contingent price, contingent asset or contingent liability), would the buyer be required to provide fair value for those contingencies at the initial-purchase accounting, and then revalue the acquisition at fair value during each accounting period until the contingency is lifted? And if so, is the adjustment in fair value in subsequent accounting periods recorded to the initial purchase price, or adjusted through period costs?
Jon Kline (jon_kline@lord.com )
Response:
The answer to the first question is no. The acquisition would remain under 141, while any additional consideration would go to goodwill. The answer to your second question is no as well.
Raymond Weisner (rweisner@valuationresearch.com )
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